According to the report, the yet to be launched Libra will have a single coin backed 1:1 by the US dollar.
Facebook Inc (NASDAQ: FB) backed digital currency Libra coin is set to be launched in January 2021 after months of legal backlashes and revision of plans. According to the report, the yet to be launched project will have a single coin backed 1:1 by the US dollar.
This is much different from the original plan that intended to see the Facebook backed stablecoin pegged to a basket of multiple fiat currencies. However, they had to revise their plans after they were subjected to intense legal criticisms from lawmakers both within the US and overseas.
Libra along the line planned on changing the idea of pegging the stablecoin to a basket of multiple fiat currencies to the idea of rolling out a series of stablecoins that would be instead pegged to a fiat currency. According to a report by the Financial Times, the first phase of the project which is the dollar-backed stablecoin may be launched in January with the other projects backed by the other fiat currencies launched later next year. The exact date the projects may roll out is yet unknown as it may depend on the time of received approval from the Financial Market Supervisory Authority.
Currently, Novi, the official wallet meant to host Libra digital currencies have been said to be ready, but may not be made available to users based in all the geographic locations. This was revealed by a developer in charge of developing the wallet.
As reported by Financial Times, much priority would be given to the US and the Latin American countries as the initial focus is“half a dozen high volume remittance corridors.”
Novi has been designed to make transactions as easy as sending a message. In a statement, they claimed there would not be any undisclosed charges on deposits. Also, funds being received, sent, or withdrawn would not be subjected to any additional charges once the project is rolled out next year.
The Libra Coin Backed by Facebook and the Legal Backlashes
Libra has a simple goal of being used as a medium of exchange globally. The idea of backing it with a fiat currency is to give it the stability that the popular cryptocurrencies lack. In the developing countries where over 1 billion people have access to Mobile phones and spend a lot in moving money around, Libra seeks to address this challenge by ensuring everyone regardless of their location access their digital financial platforms. This means it will experience a lot of competition with XRP that also seeks to address the remittance problem faced by the developing countries.
Despite its problem-solving goal, regulators believe this project can create a financial stability problem and be a tool for money laundering. Lael Brainard, the US Federal Reserve Governor, revealed that the widespread adoption of Libra and other stablecoins could interrupt the efforts of the central bank to conduct monetary policy.